The present invention relates to a method and system for monitoring the status of individual items of personal property which serve as collateral for securing financing and, more particularly, to a method and monitoring system for receiving financing information from a plurality of financing sources and for comparing the financing information received from the different financing sources to determine whether a particular item of personal property simultaneously serves as collateral to secure financing from more than one financing source.
In many inventory related industries, retail dealers, such as vehicle or boat retailers, obtain floor plan credit lines from an inventory financing source, such as a bank or captive finance company (i.e., GMAC, Ford credit, Chrysler credit) for the purchase of the vehicle or boat inventory. The floor plan credit line is a loan granted by the financing source to the retailer which acts as a revolving credit line for purchasing inventory stock, e.g., a plurality of vehicles by a vehicle dealership. As the inventory is sold, new inventory stock is received by the retailer. Therefore, the financing source has a specific security interest in each item of inventory, but cannot perfect its interest using customary procedures, such as individual UCC filings for each item of inventory. Therefore, the loan may be collateralized with a blanket lien with additional cross collateralization. Typically, the floor plan loan is to be repaid at least in part within a short predetermined period of time (i.e., 3-5 days) after a particular inventory item is sold, regardless of whether the retail customer pays in full or finances the purchase.
Normally, the financing source monitors the status of the floor plan credit line by making periodic visits to the retailer and manually checking for the presence of the particular inventory items. The inventory items are typically identified by a serial number associated with the particular item. Manual confirmation of the credit status of the inventory items is time consuming and because it is not done often, is normally not up to date. Some retailers take advantage of the delay in ascertaining the correct status of the collateral items by not immediately repaying the loan once an inventory item is sold; using the money as a "float" for financial gain. In some situations, the retailer may be financially unstable and may eventually be unable to repay the floor plan credit line. Since the collateral has been sold in the ordinary course of business, the floor plan financing source whose loan is no longer secured by collateral in possession of the dealer, has no recourse against the consumer who purchased the item. In effect, the collateral has been relinquished by the floor plan financing source to the consumer financing source, which can repossess the item in the event that the consumer defaults on his/her loan obligation. Additionally, if the retailer files for bankruptcy, the financing source which financed the floor plan credit line becomes an unsecured creditor and may not have much of a chance of having its debt repaid.
The financing sources also typically monitor the status of consumer installment loans to prevent consumers from taking advantage by not repaying their loans. In some situations, the consumer may try to take advantage of the financing source by engaging in multiple loan contracts, such that each loan contract is with a different financial lender. In the event of default of one or more of the loans by the consumer, it is later discovered that the lenders are sharing the collateral which is inadequate to cover all the loans. Additionally, sometimes consumers finance the purchase of new personal property by trading in old personal property such as in the purchase of a new vehicle. If the consumer has an outstanding loan for the old personal property which is not subsequently repaid the financing source has no recourse to recover the balance of the loan.
There is a need for a system which can monitor the status of a floor plan credit line and the credit status of a particular inventory item on a more frequent basis, preferably at least daily. The present invention is directed to a method and system for monitoring the status of individual items of personal property which serve as collateral for securing financing which generally receives input preferably on a daily basis from a plurality of subscribers. The subscribers are typically financing sources which provide floor plan credit lines and financing sources which provide any type of consumer credit, such as, but not limited to, loans, leasing, lease-line financing and credit union loans for the ultimate purchase of the collateral items. The data is organized by the serial number or some other unique identification code of each inventory item and any subsequent loan entry is associated therewith. If the monitoring system determines that two credit loans simultaneously exist for a particular inventory item, at least one respective financing source is notified so that appropriate action can be promptly taken. In this manner, the inventory financing source can learn at the earliest known point in time when a subsequent consumer loan has been granted so that it can make sure its loans are promptly repaid.